Initial jobless claims dropped to the lowest level since July

NEW YORK - OCTOBER 08: Dale Chandler's unemployment insurance notice sits on a table on October 8, 2010 in the Brooklyn borough of New York City. The U.S. government reported today that the U.S. economy continued to shed jobs for the month of September. The unemployment rate remained unchanged at 9.6 percent in August - Spencer Platt/Getty Images

TEXT OF INTERVIEW

JEREMY HOBSON: Now to the job front. We heard from the labor department this morning that initial jobless claims, that is new people filing for unemployment insurance, dropped to the lowest level since July. And the four-week moving average of that indicator, which is more reliable, has dropped to its lowest point in two years.

Let's bring in Richard DeKaser, economist at the Parthenon Group. He's with us live from Boston. Good morning.

RICHARD DEKASER: Good morning.

HOBSON: So, first on the issue of people filing for the first time for unemployment benefits. The lowest four week moving average since the financial crisis. What's your take on that?

DEKASER: Well, I think clearly the labor market is going in the right direction. You know we're on track to add about a million jobs this year, when all is said and done. The unemployment rate is down about a half a percentage point from a year ago. And the number of people as you just mentioned who are filing claims, that is getting laid off, is at a two-year low. So all of this is directionally very encouraging. The problem is we're going in the right direction, but we haven't arrived. We're not by any stretch of the imagination in a normal labor market. The jobless rate for example at 9.6 percent still makes it very tough for workers to negotiate salary increases and feel secure in their positions.

HOBSON: Meanwhile, Richard, there was a story this morning the in Wall Street Journal that Google is raising its pay by 10 percent across the board to keep employees from defecting to other companies. Is this something all kinds of employers are going to have to start doing as the job market improves?

DEKASER: No, I don't think so. You know everything I just said pretty much contradicted what Google just did. I think they're an exception. The company is doing fabulously well, it's very profitable, and I think they're trying to reinforce their reputation as a great place to work. Which is already quite strong. So if we look outside of these exceptional cases, the broader reality is that there's a lot of workers competing for jobs and that's preventing wage increases from improving. Now we may get there and I think we will get there in a couple of years, but the Google experience at the moment is I think a little bit out of the norm.